May 29, 2016
Showtime Networks, Inc. has filed a lawsuit in the U.S. District Court of New York against Top Rank, Inc. citing indemnification and breach of contract related to lawsuits filed by third parties against Showtime and Top Rank stemming from Manny Pacquiao’s claim that he fought with an injury against Floyd Mayweather, Jr.
The lawsuits, filed by individuals who purchased the PPV claimed that Pacquiao was not ready to participate in the fight because of an injury in early April 2015 and it was not disclosed. Most of the lawsuits point to the Pre-Fight Medical Questionnaire provided by Pacquiao which seemingly misrepresented the injury by not disclosing it.
Under the terms of an agreement between Showtime and Top Rank, Top Rank was to defend and indemnify Showtime from any liability (i.e., lawsuits) and supply Showtime with its own legal counsel. Showtime’s attorneys point out that a potential conflict occurred when Pacquiao did not notify officials of a shoulder injury prior to the Mayweather fight. According to the lawsuit, Showtime demanded that Top Rank pay for Showtime’s legal representations once these lawsuits were filed due to the potential conflict. Top Rank claimed that the terms of the agreement which would trigger Top Rank to defend and indemnify Showtime would be an instance of actual conflict between the parties. Per the lawsuit, Showtime claims that Top Rank did not believe that there was a conflict.
The relevant indemnification language of the Showtime/Top Rank contract is below:
— Jason Cruz (@dilletaunt) May 26, 2016
Showtime also claims that Top Rank threatened to assert its own indemnity claims against Showtime. Top Rank claimed that Showtime promotional materials for the fight were relevant in relation to claims of breach of contract filed by plaintiffs. Thus, Top Rank requested the same defend and indemnification that Showtime had been of Top Rank.
Despite the refusal to pay for its attorneys, Showtime defended the lawsuits it was named in. The legal fees through May 12, per the lawsuit is $682,754.06 plus interest. Showtime seeks to recoup this plus fees and costs of the lawsuit in this action.
It’s clear that this was bound to happen. Once Pacquiao claimed the injury post-fight, the lawsuits started to pour in from plaintiffs’ attorneys and they were going to name any and all entities in its complaints. The lawsuit presents the question of what is a conflict and what is not and when the right to indemnify and defend took place. Showtime claims that the unreported injury should have triggered the indemnification in the contract while Top Rank will likely deny this citing no conflict at the time.
We will keep you updated.
May 28, 2016
The much-anticipated bill seeking to amend the Muhammad Ali Boxing Reform Act was introduced by Oklahoma congressman Markwayne Mullin this past Thursday.
No text of the act which would amend the current law is available for the public but one would think that this should be available soon. Democrat Joseph Kennedy is co-sponsoring the bill. Thus, there is bi-partisan support for the bill as Mullin is a Repbulican.
The congressman is a former MMA fighter and is in support of legislation to protect all combat sport athletes. Information about the amendment language has been vague.
Despite the intent of the Ali Act, there are issues with the law and its enforcement.
This will be an interesting piece of legislation to track as it makes its way through committee. While I think the intent is there, the details of the amendments will be the most interesting thing. The UFC would oppose this Act and despite Bellator advocating for this, allegations in a recent lawsuit against the Viacom-owned company may say otherwise about its business dealings.
May 25, 2016
Zachery Light has filed a lawsuit in Los Angeles Superior Court against Bellator MMA and Viacom citing wrongful termination based on public policy. Light, a former MMA fighter and employee of Bellator, claims various wrongdoings while working under Scott Coker.
The lawsuit was filed on Tuesday by Light’s attorney, William Crosby.
Light, a former amateur wrestler and MMA fighter, was hired by Bellator and worked under Bjorn Rebney. He became Bellator’s Talent Development Manager. The lawsuit states he was soon promoted to Talent Development Director. He was praised for his work and “received the highest ranking on his annual reviews.”
The Complaint notes a shift of business culture when Viacom acquired Bellator and Scott Coker took over.
Light alleges that in September 2015, he became aware of a number of instances in which Bellator “failed to observe and knowingly disobeyed laws enacted to protect the health and safety” of MMA fighters. Notably, the California law requiring a medical clearance examination by a licensed physician for participants in a MMA fight. Light claimed that “a reliable source” at Bellator 126 noted that Ryan Martinez’ blood and eye medicals that were submitted to the state of Arizona “were admittedly forged.” Martinez lost his fight to Nick Rossborough.
At Bellator 131 in San Diego, Light learned from “reliable sources” that “a number of fighters on the card had submitted California state-required medicals” by Adam Rendon. Rendon, the lawsuit claims, was not a licensed physician and this was in violation of California law. Bellator 131 was the first “tentpole” event of the Coker-era which featured Stephan Bonnar fighting Tito Ortiz.
The lawsuit claims that Light talked to Rich Chou, Bellator’s Vice President of Talent, prior to Bellator 126. Chou indicated to Light that he would follow up but when he did not here from Chou he approached Scott Coker. According to the Complaint, “Coker told plaintiff (Light) “to do what Chou told you to do,” without addressing these issues.” Light went back to Chou who, according to the lawsuit, stated he would be terminated if he (Light) “kept pushing the issue.”
Light went back to Coker to question about Rendon. According to the Complaint, Coker told plaintiff, “a lot of people at Bellator are going to lose their jobs next week. Do you want to keep yours?”
In addition, the Complaint claims that Coker pressured Light into promoting collusive fights in violation of the Sarbanes-Oxley Act. The lawsuit alleges that Coker disliked manager Anthony McGann. Rampage Jackson and Cheick Kongo were managed by McGann at the time and the Complaint claims that Light was instructed to “convince Kongo to fire McGann as his manager.” Light was influenced by Coker to have Kongo fire McGann and have him sign a new promotion agreement or he (Light) would be fired.
Light was instructed to arrange fights for McGann-managed fighters under contract in Bellator with opponents “who would convincingly defeat them.” This would apparently allow Coker the pretext to cut ties with McGann and his fighters. The lawsuit makes a point of indicating that “[s]uch collusive matches were tantamount to fight fixing…”
Under the Sarbanes-Oxley Act whistleblower provisions, employees in privately held subsidiaries of publicly traded companies who assist in an investigation into an employer’s violation are protected from employer retaliation. Under the California Business and Professions Code, there is a similar provision claimed by Light.
Light also indicates that in “late 2014 and early 2015,” Mike Kogan was hired by Bellator in an executive capacity. Kogan, who Light alleges is a “close friend” of Coker claims that Kogan was “paid management commissions for fighters he represented in bouts that occurred with defendant Bellator.” This would be a “serious conflict of interest” and violation of California law.
The lawsuit states that due to stress-related to Coker and Chou refusing to follow laws and regulations and “requiring plaintiff to engage in illegal practices as a condition of keeping his job,” Light suffered an anxiety attack. The health scare occurred on April 10, 2015 after Bellator 136 on the campus of UC Irvine. He was taken to the emergency room and diagnosed with severe depression and anxiety. Light had to take an extended medical leave. He was cleared to return to work without restrictions on March 10, 2016 but was terminated on March 17, 2017 via a letter. He was advised that “his job was no longer available.”
This will be an interesting case as it goes forward. Since it was filed just yesterday, there’s still a lot to digest about the claims. As with many wrongful termination lawsuits, the allegations are salacious and may or may not be true. One would expect Bellator to deny the claims and file a motion to dismiss – none of which is earth-shattering. Obviously, the claims present a public relations issue as the company in support of amending the Ali Act to include MMA fighters are accused of doing things that oppose the protections claimed in the Ali Act. Also, the conflict between promoter and manager rears its head in another MMA promotion. We shall see about the veracity of the claims and how will Bellator address them.
MMA Payout will continue to follow.
May 22, 2016
Last week, ESPN ran an article on the proposed amendment to the Muhammad Ali Boxing Reform Act which would cover mixed martial artists. Oklahoma congressman Markwayne Mullin has indicated that he would spearhead the effort to amend the law to extend to all combat sports including MMA.
While Bellator has indicated it would support such an amendment, the UFC is not in favor of one (although no specifics have yet to be discussed). The ESPN story reports that the UFC has met with Congressman Mullin on at least on two occasions. One would surmise the meetings would be to lobby the congressman not to amend the current Ali Act. It should be noted that the UFC has not seen the proposal that the congressman seeks to amend.
For his part, the congressman has been vague with what he would do to the Ali Act aside from making it applicable to combat sports. He’s stated that promoter disclosure of revenues to fighters would be one of the reasons why the bill should be amended. Of course, the Ali Act, as it stands, has posed its own problems with this disclosure as the current law is not specific as to when the promoter must disclose financial information which makes it difficult for a fighter to negotiate. A recent example of this problem is boxer Chris Algieri.
One of the concerns from the UFC is the rankings component of the Ali Act which would assess ranking fighters. Section 11 of the Ali Act gives the Association of Boxing Commissions the right to develop guidelines for rating pro boxers. Of course, the UFC has its own rankings. It is not clear on how, or what governing body would have the right to develop guidelines for mixed martial arts. This part of the law would take control from the UFC.
If you wondered how fighters have fared when suing under the Ali Act, you can check this out. For the UFC, amending the Ali Act would mean having to abide by outside regulators and subject them to the possibility of litigation under the Act. But, as we’ve seen, litigating under the Ali Act is not as easy as it might seem. Mullin has yet to reveal his proposed amendments to the Ali Act. This is likely done on purpose so as not to tip off opposition. One would hope the amendments would be advantageous to fighters so that if they are an aggrieved party, they can seek assistance under the law.
May 19, 2016
The parties in the Top Rank Boxing v. Al Haymon, et al. lawsuit filed in federal court in Los Angeles has been settled. The parties filed a joint stipulation to dismiss the case on Wednesday. Terms of the settlement are confidential per the stipulation filed with the court.
Al Haymon and his various business entities were sued by Top Rank Boxing this past July as the promoter claimed that Haymon’s upstart Premier Boxing Champions violated federal antitrust laws as well the Muhammad Ali Act and California State Business Regulations.
Perhaps what precipitated the beginning of the end of this litigation was securing the opportunity to obtain documents (including financial information) from promoter Lou DiBella and his company DiBella Entertainment, Inc. It was claimed by Top Rank that DiBella was a “sham promoter” essentially working for Haymon.
Another theory which may have caused the two sides to settle would be the downturn of PBC. Ratings have been sluggish and reports of PBC seeping money seems valid. Also, investors filed a lawsuit in Kansas over a fund’s strategy to invest in PBC. Settling this lawsuit may negate the hefty legal bills the company is racking up.
A similar lawsuit filed by Golden Boy against Haymon continues in Los Angeles with discovery ongoing.
It will be interesting to see how much further the Golden Boy lawsuit goes. If they are to obtain documents from other promoters (like DiBella) in discovery, it could leverage into a favorable settlement. It is unknown if PBC would run the risk of continuing with defending this lawsuit if there is the possibility of losing a huge verdict.
May 15, 2016
Can Conor McGregor fight Floyd Mayweather without the UFC’s ok? The question is almost as silly as whether Ronda Rousey should fight a man. Despite the ridiculousness of it, we take a look.
As Bloody Elbow points out, there is a scenario in which its plausible that McGregor could find his way out of his UFC contract and meet Floyd Mayweather in a boxing match. Of course, the scenario would take the course of a lawsuit. And while there are those that think that’s a pretty feasible scenario, one has to look at the practical issues related to obtaining a boxing license, filing a declaratory judgment for McGregor to get out of his UFC and/or addressing a lawsuit that would inevitably be filed by the UFC for breach of contract as well as its own injunction that would prevent a fight between the two. Then, there’s the legal reason which would stifle all notions about this from happening. But we have about 6 graphs to go…
Clearly the boxing license issue is the least of the worries. One would have to think this should be the easiest of tasks. Rather than wait for a UFC lawsuit, if McGregor and Mayweather are really interested in a fight, they’d probably file a lawsuit against the UFC seeking a declaratory judgment requesting a court to allow McGregor to fight despite his contract with the company. The court of choice would be an interesting one.
A venue in Nevada seems appropriate considering the UFC’s headquarters are in the state. If McGregor decides to seek relief utilizing the Muhammad Ali Boxing Reform Act (“Ali Act”) as suggested by BE, the venue would have to be in federal court in Vegas (the same venue as the current UFC antitrust lawsuit).
So the question is whether McGregor could possibly sue under the Ali Act? It’s likely that while the argument that McGregor (as a licensed boxer) could seek relief under the Ali Act sounds plausible, it’s unlikely that a court would grant McGregor such relief.
Definitely McGregor’s supporters would hope for a broad interpretation of Section 10 of the Ali Act which indicates it a restraint of trade for a coercive contract. However, the coercive contract that is in question and that we try to litigate is the UFC contract, not another boxing contract. And that is the problem.
The purpose and intent of the Ali Act is clearly for boxing. And while there is the possibility of amending the Ali Act to include MMA incubating, the Ali Act does not cover MMA. Any argument that an MMA contract is coercive and thus should be deemed void or voidable under the Ali Act would be dismissed. As stated, attorneys for the UFC would simply argue that the Ali Act does not pertain to MMA and any safe harbor that McGregor might seek to find to nullify his UFC contract should be dismissed.
Clearly, none of us think that Mayweather/McGregor is happening. But, since I was asked about the question, I thought it would be interesting to look at it. While the legal strategy seems sound, in the end, the practicality of a lawsuit and actually prevailing on the merits would be a longshot. If this fight were to actually happen, one would think that the UFC would have to permit this to happen which would mean being, at least, a co-promoter in the event. If you thought a Mayweather/Pacquiao negotiation was tough, think of what Mayweather/McGregor/UFC would be like.
But let’s be honest, the legal process would take years and years before seeing an actual fight. I would see McGregor making amends with the UFC and continuing on as a mixed martial artists before a crossover fight ever happens.
May 15, 2016
Bellator announced two roster moves prior to its event Saturday. The most notable move was outright releasing lightweight champ Will Brooks. It also stripped its heavyweight champ Vitaly Minakov for inactivity.
The big news is that Brooks, who was 9-1 in Bellator, was shown the door and is now a free agent. Brooks had been outspoken via social media about his stay with the company. He was also labeled a malcontent by others which may have made the relationship hard for negotiations. Scott Coker confirmed via MMA Junkie that it had terminated Brooks’ contract and waived all negotiations rights so that Brooks could pursue his free agency options. One might assume that Brooks would be able to fight in another organization as soon as he could come to agreement.
“We’re not going to be in the Will Brooks business any longer,” Coker told MMA Junkie.
It appears Brooks read the quote.
I’m still in the business of Will Brooks and my business will always be good.
— Will Brooks (@illwillbrooks86) May 14, 2016
Brooks told MMA Fighting that his contract expired on July 15 with one fight left on the deal.
In addition, Coker said that Minakov would be stripped of the title. He had not defended the title since April 2014. Coker indicated that the company would retain the former Olympian’s rights despite stripping him.
Strong statement by Coker to release Brooks and strip Minakov. Frankly, I do not know the backstory behind Minakov’s inability to defend the title. But, with the recent signing of Matt Mitrione it should tell you that the company would like to bring that division back into play. As for Brooks, it’s clear that the two sides were at an impasse. The severing of Brooks without getting at least one more fight from him obviously means that the two sides were so far apart in negotiations, the company did not want to have Brooks possibly win his last contracted fight and then cut a promo on the company or pull a “Benson Henderson” (i.e., take off gloves and lay in the right) on television.
May 12, 2016
Ronda Rousey has agreed to change a portion of her autobiography to avoid a potential defamation lawsuit from former manager Darin Harvey.
Rousey’s autobiography which was released last year included a section which describes Harvey. The former UFC women’s bantamweight champion agreed to change the section for the second release when it comes out in paperback, ebook and audiobook.
The two parties settled their lawsuit in February. After a California State Athletic Commission ruled in Rousey’s favor with respect that her contract with Harvey was not valid, a lawsuit filed by Harvey in Los Angeles Superior Court remained. The court had ordered the case to go to arbitration. Yet, this new wrinkle appears to tie up loose ends.
Or does it. According to MMA Junkie, Havey claims that comments made by Rousey’s attorney in the LA lawsuit about the changes in the book were in violation of the confidential settlement agreement.
Just because Rousey and her publishing company are changing a portion of the book, it does not mean that what Rousey wrote about Harvey would be defamation. However, the prolonged litigation would have been a drag on Rousey and affect the book sales as well as a potential movie on the autobiography which is a possibility. You might recall that Rousey recently signed a deal with the Lifetime Network. For Harvey, it gives him piece of mind about his past business relationship. Of course the new wrinkle is the comments made by Rousey’s attorney in the LA lawsuit. He was not the party representing her in the potential defamation matter and Harvey’s comments make it seem like this might not be over. Violating a confidential settlement agreement has its penalties which would be included in the agreement. It would be hard to speculate on what the parties agreed to but they usually involve monetary penalties or a voiding of the agreement. Of course, a party to the agreement would have to prove that the terms were violated.
May 5, 2016
Earlier this week, it was reported that a lawsuit had been filed in Kansas by two investors that claimed that it was misled about investments made by a fund which helped Premier Boxing Champions with seed money. Despite the fact that he lawsuit filed in federal court was voluntarily dismissed and filed in state court, the lawsuit reveals information behind the funding of PBC.
Ivy Investment Management, Co. and Waddell & Reed Investment, Co. were sued by three investors in the funds which helped fund PBC in a derivative lawsuit filed earlier this year. Ryan Caldwell, the portfolio manager, was accused of spending the money for his own intended benefit.
The federal complaint claims that the two funds spent approximately $925 million on “a start-up and potentially criminal” boxing promotion.
The plaintiffs claim that Caldwell’s actions were against the prospectuses for the Funds.
The complaint states that the investment strategy “primarily focuses on securities issued by large capitalization companies” which offered a “high probability of return or, alternatively, can provide a high degree of relative safety in uncertain times, with Strong cash flow streams and “high sustainable cash flow.” Plaintiffs claim that PBC was a “high-risk venture” which met none of the criteria.
They also claim that as a fund manager he should have been making objective investment decisions.
The lawsuit alleges that Caldwell did not disclose an affiliation with PBC or Al Haymon which plaintiffs infer was either a potential or actual conflict of interest related to the investment strategy for the fund.
Plaintiffs also state that Caldwell resigned as the fund manager to join one of Haymon’s companies.
Courthouse News reports that the funds defend the investments and cite the fact that two similar prior lawsuits were dismissed.
Last year, the Sports Business Journal did a story on PBC which indicated that the Waddel & Reed fund was $40 billion.
One might expect the state lawsuit to mirror the federal lawsuit. The Complaint takes some information from the Top Rank/Golden Boy – Al Haymon lawsuit. Notably, the three plaintiffs are not residents of Kansas. However, Ivy Management’s principal office is in Overland Park, Kansas. It will be an interesting lawsuit as the funds will defend its investment strategy and likely characterize the plaintiffs as disgruntled investors. While the complaint is compelling, investor discontent happens especially when money is lost and/or the return on investment is not what was expected. Last April, the Sports Business Journal did a story on the investment behind PBC and the fact that Caldwell had helped infuse the startup with $425 million in capital from a $40 billion fund. The story also went on to discuss that Caldwell invested about $1.5 billion in Formula One racing out of the same fund.
MMA Payout will continue to follow.
May 4, 2016
Floyd Mayweather, Jr. may be returning from his short retirement based on a couple trademarks filed late last month with the United States Patent and Trademark Office.
In an interview with Showtime this past Saturday, the 49-0 fighter maintained he is staying out of the ring but conceded he has had talks with CBS and Showtime about returning to the ring.
Perhaps evidence of his possible return was the trademark filings which relate to the fighter winning 50 fights. “TMT 50” (“TMT” an acronym for “The Money Team”) and “TBE 50” (“The Best Ever”) were filed on April 21, 2016. The owner/applicant of the marks is Mayweather Promotions, LLC.
Mayweather has a vast trademark portfolio to capitalize and protect his businesses.
Is Floyd coming back? Do the trademark filings mean anything? Or, are they just to protect his brand and business? Will his return matter? All good questions for the boxing world. But, if he were to return, it would seem that Mayweather could not just come back against anyone. His last fight with Andre Berto did poorly on PPV and its unlikely he would come out of retirement against a viable challenger.